UMBS in the green 15 bps early today. Which is nice. S&P futures up 29.75
It’s been a slow, uneventful week so far in terms of scheduled events. Even though we certainly saw some elevated volume and volatility over the past two days, trading levels continued to grind mostly sideways in the lower middle portion of the range.
If we had to pick one wild card event for the week, it would be Powell’s Jackson Hole speech, which the market saw as a potential venue to confirm or comment on the certainty and pace of rate cuts in the upcoming Fed meeting. While the speech itself made no comment on 25bp vs 50bp, Powell’s forcefully assumptive tone (i.e. “the time has come for policy to adjust. The direction of travel is clear.”) is fueling the sharpest bond rally of the week so far.
Yesterday, the FOMC minutes indicated that unless something dramatic happens, the Fed is set to cut interest rates at their September meeting.
Existing home sales rose 1.3% in July to a seasonally adjusted annual pace of 3.95 million, according to the National Association of Realtors. This snaps a 4 month losing streak which started in March. On a year-over-year basis, sales fell 2.5%. Total housing inventory rose 0.8% to 1.33 million units, which is up 19.8% compared to a year ago. The median home price rose to $422,600, up 4.2% compared to a year ago. New Home sales rose by more than expected in July, increasing 10.6% to a seasonally adjusted annual rate of 739,000. This is still down about 5.8% compared to last year.
If Friday was going to offer any example of scheduled events causing movement in the bond market, it fell to Powell’s Jackson Hole appearance to do the heavy lifting. On that note, everything went off in a logical and fairly ideal way. Powell forcefully confirmed the Fed policy shift despite stopping short of giving any sort of indication on the size of the forthcoming rate cut in September. Bonds rallied instantly upon the release of the Powell’s prepared remarks and, in the absence of a Q&A session, that was it for the day. MBS and Treasuries hit their best levels a few moments later and both are heading out the door at almost the exact same levels.
British researchers have trained a hydrogel to play the 1970s computer game Pong, improving over time. The study builds upon earlier research showcasing the ability to conduct a similar experiment using brain matter.
Researchers at the University of Reading placed a piece of water-based gel between two plates of electrodes. They administered electric currents representing the paddle and ball through the gel, training it to extend the length of time the ball was in play. The gel reached its peak “skill” level after 20 minutes.